Lighthouse Regulatory News (LGT)

Lighthouse Group plc

("Lighthouse", "the Group" or "the Company")

Final Results

Lighthouse Group plc (AIM: LGT) today announces its final results for the year ended 31 December 2015.

Highlights

· EBITDA* up 33 per cent. to £1.6 million (2014: £1.2 million);

· Profit before tax up 50 per cent. to £0.9 million (2014: £0.6 million);

· Revenues up 4 per cent. to £49 million (2014: £47 million) with 48 per cent. of revenues generated from clients being recurring (2014: 47 per cent.);

· Average revenue production per adviser increased 8 per cent. to £93,000 (2014: £86,000);

· Increase in gross margin percentage to 30 per cent. from 29 per cent;

· Operating costs increased to £13.2 million (2014: £12.1 million) as a result of higher regulatory costs and increased business levels;

· Net cash balances** up £1 million to £8 million (2014: £7 million);

· Operating cash flow generated £1.1 million (2014: £0.7 million generated before payment of £1 million restructuring costs charged in 2013);

· Interim dividend of 0.08 pence per share (2014: 0.06 pence per share) paid and proposed final dividend of 0.16 pence per share (2014: 0.12 pence per share);

· Three new affinity contracts signed and a number of other contracts renewed or extended.

* Earnings before interest, tax, depreciation, and amortisation.

**Net cash stated after deduction of bank loan of £0.4 million (2014: after deduction of bank loan and unsecured loan stock of £2 million in aggregate).

Commenting on the results, Richard Last, Chairman of Lighthouse Group plc, said: "The Group has continued to make good progress during 2015. The increase in average annualised revenue per adviser and gross margin resulted in a significant increase in earnings which creates sound foundations for the future. With the opportunities in such areas as increased flexibility in the personal and corporate pension markets, together with a strong cash balance, operational scale and a robust business model, Lighthouse is well positioned to deliver future growth."

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CHAIRMAN'S STATEMENT

OVERVIEW AND FINANCIAL PERFORMANCE 

I am pleased to report that the Group's results for the year ended 31 December 2015, which are set out below and in the Consolidated Statement of Comprehensive Income on page 30 of the Annual Report, show a continuing strong financial performance by the Group, with EBITDA increasing to £1.6 million in 2015 compared to £1.2 million in 2014 on total revenues of £48.9 million and £46.8 million respectively. Profit before taxation for the year amounted to £0.9 million compared to £0.6 million in 2014. Earnings per share increased by 55 per cent. to 0.68 pence per ordinary share (2014: 0.44 pence per ordinary share).

Average revenue production per adviser increased by £7,000 (8 per cent.) to £93,000 in 2015 (2014: £86,000). Recurring revenues continued to grow and in 2015 amounted to £22 million or 48 per cent. of total revenues generated from customers (2014: £19 million and 47 per cent. respectively).

Gross margins increased to 30.3 per cent. in 2015 from 28.5 per cent. in 2014, as a result of a change in the mix of revenue generation in favour of the higher added-value national affinity and wealth management segments. Operating costs increased by £1.1 million or 9 per cent. from £12.1 million in 2014 to £13.2 million in 2015, as a result of a 54% or £442,000 increase in regulatory charges from the Financial Conduct Authority ("FCA"), the cost of utilising professional indemnity insurance and additional resources deployed to deal with the increased business volumes arising from the pensions freedom legislation which came into effect in April 2015.

FINANCIAL POSITION

The Group had net cash of £7.9 million as at 31 December 2015 year end compared to £7 million at the previous year end, an increase of 12 per cent. Unsecured loan notes, together with rolled-up interest and totalling £1.6 million, were repaid on schedule on 31 December 2015. As noted in previous reports, the Group has given undertakings to its regulator, the FCA, that no distribution or non-trading payment will be made from its regulated subsidiaries without prior discussion and assent.

Approximately £4 million (2014: £5 million) of the Group's net cash balances are presently required to meet its regulatory capital obligations and normal working capital requirements. The Board considers it prudent to retain the remainder of those funds (approximately £3 million) within the business to support trading and its growth plans for Lighthouse Financial Advice ("LFA"), the Lighthouse Pensions Trust auto-enrolment product ("LPT"), the wealth management division and other initiatives.

BUSINESS RELATIONSHIPS AND DEVELOPMENT

Lighthouse Financial Advice ("LFA") and LighthouseCarrwood ("Carrwood")

The Group continues to maintain and increase its relationships (both contractual and non-contractual) with its affinity group and professional partners which are the main drivers for growth in LFA and Carrwood respectively.

LFA, the Group's national and affinity-based subsidiary, continues to develop satisfactorily and is believed to be the largest supplier of financial advice to affinity group members in the UK with 17 contracted relationships covering approximately 6 million individual members. In 2015 revenue generated from affinity-based sources increased by 22 per cent. to £6.6 million compared to £5.4 million in 2014. LFA will continue to focus on extending the range and scale of its services to members of its affinity partners.

LFA's focus in 2015 has continued to be to deepen its relationships with existing affinity groups and to secure new relationships. I am pleased to report that since my last annual statement in February 2015 LFA has secured new three-year contracts with the Association of Teachers and Lecturers, the General Federation of Trades Unions and the University and College Unions in September and November 2015 and January 2016 respectively which make LFA the preferred supplier of financial advice to members of those groups, adding approximately 0.5 million new affinity members to the Group's previous total. In addition, I am pleased to announce that the Group agreed renewals for existing contracts for a further three years with BA Clubs, the Association of School and College Leaders and the Bakers, Food and Allied Workers Union during 2015 as well as a fifteen month extension of the contract with the Royal College of Nurses.

The benefits of the on-going investment in LFA are illustrated by the division contributing £3 million to Group EBITDA in 2015, in comparison with £2.3 million in 2014.

Lighthouse Workplace Solutions ("LWS")

During the year the Group has continued to develop its innovative solutions for employers under the banner of Lighthouse Workplace Solutions. With 500,000 small and medium-sized enterprises ("SMEs") with 50 or less employees - the Group's target market for its Lighthouse Pensions Trust ("LPT") solution - having to establish auto-enrolment ("AE") compliant workplace pension schemes for their employees during 2016, a further 1 million having to do so in 2017 and a total of 1.8 million SME businesses scheduled to stage AE-compliant schemes between 2016 and 2018, the Group is fully engaged on maximising distribution for the LPT product. This includes considerable adviser engagement with the business community, as well as expanding partnerships with major introducer groups, including payroll and accountancy organisations as well as other commercial groups such as Avensure Limited as announced in September 2015.

In June 2015 the Group launched the Lighthouse Life Trust ("LLT"), an unbundled master trust product through which SMEs that have signed up to using LPT to fulfil their auto-enrolment obligations can offer death-in-service cover to their employees without the need to take prior medical history into account and which is underwritten by Zurich Insurance Group. The LLT adds further to the breadth and scope of the LWS offering and additional and complementary workplace product solutions are also being developed which will extend further the Group's move into the product manufacturing space.

Lighthouse Advisory Services ("LASER")

LASER, the Group's network business, continues to focus on helping its member firms to improve the productivity and efficiency of their businesses whilst adopting a more rigorous approach to compliance and quality control. The turnover of LASER for the year to 31 December 2015 amounted to £24 million (2014: £25 million). Although the number of member firms declined slightly over the year our relationship with existing members remains positive and productive.

STATUTORY AND REGULATORY DEVELOPMENTS

The past year has seen a continuation in the volume and pace of regulatory change, with the commencement of "pensions freedom" whereby individuals can access their accumulated pension funds earlier and in greater proportions in cash than under previous legislation, the Financial Advice Market Review ("FAMR") by HM Treasury and the FCA and the changes in the basis for calculating the minimum level of regulatory capital to be held by financial intermediaries.

Whilst many of the new policies and legislation are welcome in principle, as they have been introduced with a view of extending choice and the availability of advice to consumers, the magnitude of change, often at relatively short notice, has been difficult for the financial advice market to absorb. The potential long-term consequences and impact on consumers and the market for financial advice in the UK gives cause for concern.

The Group continues to take a positive approach towards assessing and dealing with new developments in the markets within which it operates, for the benefits of its customers, advisers and stakeholders.

DIVIDENDS

A final dividend of 0.16 pence per ordinary share (2014: 0.12 pence per ordinary share), an increase of 33 per cent., is recommended by the Board and, subject to approval at the forthcoming Annual General Meeting, will be payable on 21 April 2016 to shareholders on the register at close of business on 1 April 2016. The corresponding ex-dividend date is 31 March 2016. This follows the interim dividend of 0.08 pence per ordinary share (2014: 0.06 pence per ordinary share) paid in October 2015. This is subject to regulatory approval as noted above, which has been granted.

EMPLOYEES AND BOARD

I would like to express my appreciation to all of the Group's advisers for their continuing loyalty, enthusiasm and professionalism and to my fellow directors and all of the Group's employees for their hard work and dedication during the year.

STRATEGY AND PROSPECTS

The Group continues to focus on developing its own product offerings and focusing on those operations within the Group which provide higher margins, whilst seeking to improve efficiency and ease of operation across all areas of the Group.

It is unlikely that we will see any reduction in regulatory costs going forward. In addition, recent market volatility, if continued for a sustained period of time, will inevitably impact on consumer confidence as regards investing for the future. Notwithstanding this, with a focus on profitable growth and cost efficiency, whilst continuing to mitigate risk for the Group and its customers, the Board believes that the Group is well placed to take advantage of the opportunities available.

Richard Last

Chairman

19 February 2016

CHIEF EXECUTIVE'S REVIEW

OVERVIEW

The Group achieved further progress in 2015 against a backdrop of continuing changes within the market for the provision of financial advice in the UK. Legislation previously enacted resulted in liberalisation of the pensions market coming into force from April 2015 which has provided challenges to product providers and customers alike but also opportunities for highly qualified advisers such as those within the Group to provide appropriate, holistic financial advice to, in particular, those customers located in what is termed "Middle Britain" - the Group's principal area of focus, especially for its national advisory subsidiary, LFA.

In addition, the process known as the "sunset clause" arrangement, whereby client investment assets held on platforms will no longer be subject to historic trail (originated prior to 1 January 2013) by 31 March 2016 but will instead be moved into clean share classes with no on-going trail payments, progressed further during the year with platform providers establishing systems and procedures to achieve such transfers by, or in many cases well before, the required deadline.

During 2015 the Group has continued to address these and other developments within the UK retail financial services market whilst continuing to invest in adviser recruitment, technology development and product initiatives in order to better serve its customers and take advantage of the many opportunities that exist.

The Group has continued to invest in and expand its Lighthouse Pension Trust ("LPT"), a wholly compliant and straightforward way (via a Master Trust structure) for SMEs to fulfil their auto-enrolment obligations. The LPT was awarded a five-star rating by Defaqto, the leading research and rating agency for financial services, in its first review of auto-enrolment solutions in December 2014. With 1.8 million SMEs (the principal target market for distribution of the LPT) having to establish auto-employment compliant pension schemes between 1 January 2016 and March 2018, the Group has invested time and resources over the past two years in developing and refining the offering and in fully training its advisers in delivering the product for the benefit of SMEs and their employees.

The Group's auto-enrolment proposition comprises initial advice to businesses from one of the c200 advisers within the Group that have registered to participate, backed up by specialist technical support and followed by access to the LPT arrangement with funds managed by AllianceBernstein, a global asset manager with some $468 billion of funds under management, and a subsidiary of Eversheds LLP as Corporate Trustee.

The c200 advisers registered by the Group to provide advice in this area have been fully trained and are now actively engaging with SME businesses that have staging dates in the next three years, and the experienced pensions staff within the Lighthouse Group Employee Benefits ("GEB") division of LighthouseCarrwood Limited ("Carrwood"), the Group's wholly owned subsidiary which holds 44 accountancy and professional connections, stand ready to help SME customers to satisfy their obligations under auto-enrolment.

The range of options available to SME employers within the suite of products now termed Lighthouse Workplace Solutions ("LWS") was expanded during the year by the launch in June 2015 of the Lighthouse Life Trust ("LLT"), an unbundled master trust offering through which employers that agree to use LPT to meet their auto-enrolment obligations can access a death-in-service ("DIS") product fully underwritten by Zurich Insurance Group without the need for prior medical history to be taken into account. The LLT enables SMEs to provide their employees with up to four times' salary as DIS cover which was in most cases not previously available to such businesses.

Electronic and on-line technologies continue to become more embedded within engagements between the Group, its advisers and its clients. The Group has recognised this by continuing to invest in its Lighthouse Fairway operating system, comprising a unique integration of two market-leading software systems, Intelligent Office, supplied by Intelliflo Limited through which all business is processed, and Dynamic Planner, the highly-regarded risk-profiling tool supplied by Distribution Technology Limited ("DT"). The Fairway offering has been developed further during 2015, with enhancements made to the mortgage application now available to support the specialist mortgage and protection offering - Lighthouse Mortgage and Protection Services ("LMPS") - launched in January 2015 as well as expansion of links with provider systems to facilitate further the procurement of electronic valuations and access to client data. The Fairway proposition is mandatory for the Group's national, affinity-based LFA business and in the accountancy and professional connections, high net worth focused Carrwood division, and is gaining increased adoption across all other parts of the Group.

The DT Dynamic Planner system also underpins the Lighthouse Researched Solutions mandated for use within LFA which are made available to all advisers within the Group.

The Group continues to examine how the gap between the traditional, "full advice" model and execution-only services might be filled in order to provide access to appropriate financial products to the large swathe of consumers in the UK who hitherto have not had access to properly researched and advised financial products. The pilot scheme launched in the first quarter of 2015 to provide automated, on-line advice and access to straightforward financial products has provided useful data for further developments in this area.

The Group increased its EBITDA to £1.6 million in 2015 from £1.2 million in 2014 whilst continuing to develop its main businesses. Further details of 2015 trading are set out later in this review.

 OPERATIONS

The Group continues to provide financial advice through its three principal business segments, being:

- Lighthouse Financial Advice ("LFA"), the affinity-based national advisory division;

- Wealth management, comprising employed and highly specialist and qualified advisers within Carrwood, working through accountancy and professional connections, and LighthouseWealth Limited ("Wealth"), serving a similar high net worth client base through the client banks of its self-employed advisers; and

- Lighthouse Advisory Services Limited ("LASER"), the Group's authorised network of self-employed advisers, operating under their own brands but with access to the same Fairway technology and Researched Solutions product suites available elsewhere in the Group.

At 31 December 2015 the Group employed 151 staff including employed advisers and operated out of three principal locations, being London (plc office and base for City-based advisers), Stockport (operating base for Carrwood, GEB, compliance and IT support centre) and Woodingdean, near Brighton (base for LFA operations support and finance and adviser remuneration functions).

DIVISIONAL COMMENTARY

Lighthouse Financial Advice

LFA comprises the Group's national advisory business focused on providing appropriate financial advice and solutions to the market area termed "Middle Britain", including having contractual arrangements as the preferred provider of financial advice to the members of 17 affinity groups across the UK, covering some 6 million members. Since 1 January 2015 the Group has signed new contracts as the preferred provider of financial advice to the members of the Association of Teachers and Leaders ("ATL"), the General Federation of Trade Unions ("GFTU") and the University and College Union ("UCU") each for initial three-year periods. These contracts secure on-going advice provision to a combined member population of 0.5 million individuals.

In addition, in September 2015 the Group announced the renewal of existing affinity contracts with BA Clubs, the Association of School and College Leaders ("ASCL") and the Bakers, Food and Allied Workers Union, each for a further three-year period, and the extension of the contract with the Royal College of Nurses for a further fifteen months. These contract wins, renewals and extensions underline LFA's position as the adviser of choice for affinity groups and their members and the continuity of such arrangements (with the total contracted membership now some 6 million) provides an exceptional base for future development within LFA.

The higher and further education sector has become a particular focus with contracts now in place for in excess of 300,000 senior academics, lecturers, head teachers, teachers, postgraduates and other staff across the sector.

With revenues generated from affinity-based leads across the Group reaching £6.6 million in 2015 - an increase of £1.2 million or 22 per cent. over the £5.4 million achieved in 2014 - approximately £5.7 million or 43 per cent. of total revenue generated by LFA is now derived from affinity sources, which proportion is expected to increase as penetration of such relationships becomes deeper and more effective.

In addition LFA is leading the Group's development of its Lighthouse Workplace Solutions ("LWS") suite of products targeted at helping SMEs provide cost-effective and attractive workplace solutions for the benefit of their employees.

Operating from modern premises near Brighton, owned by the Group under a long lease and which house a professional call centre and client service and events teams, and embracing fully the Group's Fairway technology solution and its Researched Solutions product range, LFA is well placed to meet the challenges and take advantages of the opportunities available as a prime adviser to Middle Britain.

In 2015 LFA contributed gross revenues of £16.1 million (2014: £14.3 million) and an EBITDA after allocation of central costs of £3 million (2014: £2.3 million).

Wealth management

Wealth management, incorporating highly-skilled employed advisers within Carrwood and GEB and self-employed advisers within Wealth, continued to progress with revenues reaching £8.8 million, an increase of £1.1 million or 14 per cent. over the £7.7 million recorded in 2014. The principal area of increase was from the employed advisers working with the Group's accountancy connections within Carrwood where revenues increased by £0.5 million or 14 per cent. to £4.2 million from £3.7 million due to an increase of £30,000 or 18 per cent, in average annualised revenue production per adviser, to £195,000 from £165,000, generated from advice provided across all product areas.

The Group has invested c£100,000 in the further development of the Group's LPT offering, including the Group taking over as the principal employer to the Trust in December 2015, and related workplace solutions such as the LLT, which has been fully expensed in the 2015 results, and this, together with higher regulatory and PII costs as noted above, has resulted in the wealth management segment contributing an EBITDA after allocation of central costs of £256,000 (2014: £376,000).

Advisers within Carrwood and GEB are supported by the specialist administrative and paraplanning resource located in the Group's modern premises in Stockport, within easy reach of Manchester, the principal financial centre in the North-West of England, and Wealth advisers operate remotely or from the Group's head office premises in the City of London. Carrwood has some 44 contractual arrangements with accountancy firms to provide financial advice to their clients and this, together with GEB being the administrative support centre for LPT and LLT distribution and Wealth's revamped and highly attractive offering for City-based and other advisers operating in the high-net worth marketplace, provides a firm base for further growth in the wealth management sector.

Lighthouse Advisory Services ("LASER")

The Group's network segment, LASER, saw revenues reduce from £25 million to £24 million as a result of a small number of member firms becoming directly authorised or otherwise having moved out of the Group. The Group continues to focus on minimising risk for itself, its clients and its advisers within the network arena in recent years and the advisers currently within LASER continue to benefit from the full Lighthouse Fairway technology and Lighthouse Researched Solution product offerings being available to them. The Group will continue to work with those firms which embrace these developments.

After allocation of central costs, the network segment incurred a negative EBITDA of £0.7 million (2014: negative EBITDA of £0.3 million).

Central costs not allocated to segments amounted to £1 million (2014: £1.2 million).

PROFESSIONAL INDEMNITY INSURANCE ("PII")

PII cover remains an essential cost of continuing to advise clients within the UK retail financial services market, and the market for such cover in the UK remained tight during 2015 with a limited number of carriers wishing to participate in insurance arrangements (either as principals or syndicate members) and premiums as a proportion of revenues continuing to rise.

As noted in the 2014 Annual Report, the Group secured a renewal of its coverage in December 2014 for an eighteen-month period, with the adoption of carefully risk-rated researched solutions being a key factor in achieving renewal with a single-digit premium increase in total quantum terms and largely unchanged individual case excesses.

REGULATION

The financial services distribution sector continues to experience major changes introduced by UK Government and the FCA aimed at increasing savings within the UK and at providing individuals with increased choice. Inevitably such changes are accompanied by rafts of legislation, often introduced at short notice, and the Group will continue to engage with regulatory authorities with a view to achieving a more proportionate approach to UK regulation of retail financial services whilst continuing to recognise the need to minimise risk and provide appropriate advice to its customer base.

FINANCIAL COMMENTARY

The results of the Group for the year ended 31 December 2015 are set out in the Consolidated Statement of Comprehensive Income in the Group's Annual Report.

REVENUE AND GROSS MARGINS

Total revenues increased by £2.1 million or 4.5 per cent. to £48.9 million from £46.8 million in 2014 as a result of an increase in average annualised revenue production per adviser of £7,000 or 8 per cent. to £93,000 from £86,000 in 2014. As in prior years, this represents a considerable achievement by the Group and its advisers.

Recurring revenues amounted to £21.6 million (48 per cent. as a proportion of total revenues generated from customers) in 2015, an increase of £3 million or 16 per cent. from the £18 million (47 per cent. as a proportion of total revenues generated from customers) received in 2014, despite the impact of providers and advisers addressing issues such as the sunset clause introduced by the FCA which prohibits payment of trail commissions from assets held on platforms by at the latest 1 April 2016.

Gross margins, expressed as a percentage of total revenues, increased to 30.3 per cent. from 28.5 per cent. in 2014 as a result of a higher proportion of revenue arising in the Group's higher margin national affinity and wealth management segments.

OPERATING COSTS

Operating costs increased in 2015 by £1.1 million to £13.2 million from £12.1 million in 2014. The increase arose as a result of higher regulatory costs, with the latest FCA invoice received for the year to 31 March 2016 showing an increase from prior year of c£0.5 million or 54%, primarily reflecting a substantial increase in the recurring levy charged by the FCA as contributions towards the funding of the Financial Services Compensation Service, the cost of utilising PII and additional staff and related resources to address the increased volume of client enquiries following the introduction of pensions freedom from April 2015.

The Group continues to monitor closely its operating base and looks to minimise such costs and to recover regulatory and PII costs from advisers and/or clients wherever possible.

CARRYING VALUE OF INTANGIBLE ASSETS AND GOODWILL

As required by accounting standards, the Board has undertaken a review of the Group's intangible assets including goodwill arising from business combinations as at 31 December 2015 to identify whether any indicators of impairment existed as at that date and, in the case of those intangible assets with indefinite useful economic lives, whether the carrying values were supported by the estimated net present value of future cash flow projections from the relevant Cash Generating Units or business segments. No such impairment factors were identified and hence no additional provision for impairment has been made (2014: £Nil). 

RESULTS FOR THE YEAR

The Group recorded an EBITDA for the year of £1.6 million (2014: £1.2 million). After £0.5 million depreciation and amortisation (2014: £0.5 million) and net finance costs of £0.2 million (2014: net finance cost of £0.1m), the Group recorded a pre- and post-tax profit of £0.9 million (2014: £0.6 million).

NET ASSETS AND TOTAL EQUITY

The Group's net assets increased by £0.6 million in the year, being the profit for the year of £0.9 million reduced by dividend payments totalling £0.3 million.

CASH FLOW, CASH BALANCES AND TREASURY

Net year end cash balances, after deduction of a commercial property bank mortgage (secured on the Group's long-leasehold property near Brighton), amounted to £7.9 million (2014: £7.1 million after deduction of the bank mortgage and unsecured loan notes), as a result of the £0.6 million profit retained for the year together with favourable working capital movements. The bank mortgage of £0.5 million was taken out in October 2013 to part fund the long-leasehold interest in the Group's LFA operational premises in Woodingdean (total acquisition cost: £1.1 million) and is repayable by quarterly instalments, with the balance being subject to rollover or refinancing in October 2018. The unsecured loan notes of £1.3 million, raised through three institutions in 2013, were redeemed on schedule on 31 December 2015 together with rolled-up interest of £0.3 million.

The undertakings previously given by the Group to the FCA in respect of maintaining assets and seeking prior approval for distributions by its regulated subsidiaries remain in force at this time. After allowing for regulatory and working capital considerations the Board will continue to retain the £3 million of cash it holds in excess of regulatory capital requirements in short-dated accounts for the time being. 

PROSPECTS

As noted above, the Group has continued to invest in its businesses and in new initiatives such as the Lighthouse Workplace Solutions. These, together with complementary offerings to be introduced in future periods, the on-going focus on higher value-add divisions - LFA and Wealth Management - and focused development of the advisers within the network division in conjunction with the Group's Fairway technology and carefully selected Researched Solutions, leave the Group well placed, with a solid financial position and net cash, to take advantage of opportunities.

Malcolm Streatfield

Chief Executive

19 February 2016

Lighthouse Group plc

Consolidated statement of comprehensive income

for the year ended 31 December 2015

All activities are classed as continuing.

The profit and total comprehensive income for both 2015 and 2014 were wholly attributable to the equity holders of the Company.

Lighthouse Group plc

Consolidated statements of changes in equity

for the year ended 31 December 2015

Lighthouse Group plc

Consolidated statement of financial position

at 31 December 2015

The financial information was approved by the Board of Directors on 19 February 2016 and was signed on its behalf by

Malcolm Streatfield

Chief Executive

Peter Smith

Finance Director

Lighthouse Group plc

Consolidated statement of cash flows

For the year ended 31 December 2015

Lighthouse Group plc

Notes to the financial information for the year ended 31 December 2015

1.  Basis of preparation

The financial information, which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statements of Changes in Equity, the Consolidated Statement of Financial Position and the Consolidated Statement of Cash Flows and the related explanatory notes, has been extracted from the audited financial statements for the year ended 31 December 2015 and has been prepared on the basis of the accounting policies set out therein and in accordance with International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board as adopted for use in the EU ("IFRS").

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Earnings per ordinary share

The calculation of the basic and diluted earnings per share attributable to equity shareholders of the parent company is based on the following data:

3. Dividends

The directors recommend the payment of a final dividend for the year ended 31 December 2015 of 0.16 pence per ordinary share (2014: 0.12 pence per ordinary share).

4. Annual report

The annual report and audited financial statements will be posted to shareholders on or about 7 March 2016 and copies are available for collection indefinitely from the Company's registered office at 26 Throgmorton Street, London, EC2N 2AN or at the Group's website (www.lighthousegroup.plc.uk).

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